Common red flags for home buyers

Besides physical defects, don't overlook financing and agent professionalism

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Last year, before the subprime crisis hit, a home buyer was on the verge of purchasing his first home. His mortgage broker told him that qualifying for a mortgage would not be a problem. After reviewing the numbers of an attractive teaser-rate adjustable, the buyer had second thoughts. He called a knowledgeable friend and asked her to review the loan documents with him. After fully understanding how much the loan would ultimately cost, he decided not to go through with the sale. In the residential real estate business, a red flag refers to a condition affecting a property that might be a material fact that needs further investigation. A material fact is something that would affect the buyers' decision to buy or the price they would be willing to pay. For example, a hole in the roof is a red flag that the roof might need replacing. Although red flag is a concept commonly associated with the physical aspects of a property, it's a valuable notion for home buyers to keep in mind...